Footsie rally spoils bears' picnic

BUYERS returned to the London stock market with a vengeance, sending the FTSE 100 sailing through the 4000 mark for the first time in more than a month.

Spurred initially by Bank of Ireland's indicative bid of more than £10bn for Abbey National, it went into overdrive when the Dow soared 300 points to above 8000, following better-than-expected third-quarter figures from blue-chips such as Citigroup, Bank of America and Johnson & Johnson.

Hopeful that the Dow's fourth consecutive daily gain signals that the long and painful bear market has at last run its course, the Footsie climbed 198.7 to 4130.3 The 5.5% gain, worth £47bn, was its biggest percentage rise since 10 April, 1992 and its third biggest points gain ever. The Dow finished 378 points ahead at 8255.68. Hedge funds, which have made a mint on the downward tack, were left to lick their wounds.

With rumours that a leading securities house had pumped millions into the market, one optimistic fund manager said: 'Setting aside the Iraqi factor, it really does look as though we have seen the bottom.'

As Abbey National soared 67p to 685p after rejecting BoI's terms, Royal Bank of Scotland rose 150p to 1515p, HBOS 63 1/2p to 700p and Barclays 34p to 457p. Insurers took on a new lease of life. A strong recovery in equity markets would ease solvency worries. Aviva, the former CGNU and Norwich Union, jumped 52 1/2p to 488p, while Royal & Sun Alliance advanced 9 1/2p to 106 3/4p. Prudential rose 39p to 452 1/2p.

US owned broker Lehman Brothers gave oils a lift by raising its forecast for Brent crude in the fourth quarter by 27% to $28 a barrel. It cited a drop in stocks, supply restraint by OPEC and the risk of war in Iraq. BP gushed 25p to 448p, Shell 23 1/2p to 422 1/2p.

Mobile giant Vodafone buzzed 7p higher to 101p with the help of a WestLB Panmure recommendation. Analyst John Tysoe expects Vodafone eventually to succeed in buying France's SFR, but in months, not weeks.

Support services group South Staffordshire advanced 36p to 463 1/2p. Turnover swelled to 40m after broker Collins Stewart placed Vivendi Environnement's 31% stake (19.7m shares) at 430p with 11 institutions. Regulator Ofwat's warning to customers not to expect more cuts in their water bills in the 2004 price review left United Utilities 28 1/2p higher at 617p, Severn Trent 29 1/2p better at 678 1/2p and Pennon up 10p at 651p.

Perceived to have been heavily oversold, Isoft, which supplies software products to the healthcare sector, gained 23p to 167p.

Dicom rose 22 1/2p to 37 1/2p after signing an exclusive licensing agreement with US based Cardiff Software to integrate a version of its product into its Ascent Capture Software. Dicom has also sold 33% of its loss-making Samsung General Agency.

Construction group MJ Gleeson fell 122 1/2p to 930p in a restricted market following disappointing results. Upmarket property agent Chesterton put on 2p to 21p after announcing bid talks with a junior management buy-in team that does not include anyone at board level.

Following news that Knight Securities has finally given up the ghost and withdrawn from market-making, Close Brothers, which owns Winterflood Securities, improved 38 1/2p to 533 1/2p.

Aim-listed Knowles Holdings added 5p to 34 1/2p after acquiring a 65% holding in BBCG, a Canadian loss adjuster dealing with specialised commercial business, for £613,000. Details of a five-year contract with Vauxhall Motors to be the sole supplier of maintenance and repair operations at the car giant's Ellesmere Port factory in Cheshire helped Premier Farnell accelerate 15 1/2p to 150 1/2p.